TNAG-0658-FCO40-807-Policy-of-Government-of-Hong-Kong-on-education-1977 — Page 155

CONFIDENTIAL

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XCC(77)19

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continuity or decline in standards. It is now considered, however, that this transitional stage can be provided for within the framework of a permanent Authority, by the gradual phasing in of the Authority's control over the examinations that it will eventually operate, and by the appoint- ment of the Director of Education for a 3-year term as first Chairman of the Authority. By dispensing with a Provisonal Authority stage, the need to draft and enact two separate pieces of legislation within a period of only two or three years will be avoided.

Financial arrangements

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In paragraph 17 of memorandum XCC(75)42, it was proposed that the Authority should become self-financing five years after the vesting day of the Frovisional Authority, and that the Authority should receive in the intervening period a subsidy from the Government in the form of annually diminishing block grants. Estimates have now been made of the amount of subsidy at present provided for examinations, the likely total expendi- ture of the Authority, and the possible effect on fee levels of phasing out the Government subsidy over periods ranging from two to five years. After careful consideration of the various alternatives, it is recommended that the present Government subsidy of approximately $5 million should be phased out over a 3-year rather than a 5-year period, the rate being 75% of the present subsidy in Year One, 50% in Year Two, and 25% in Year Three, adjusted for inflation, and that approval of this subsidy should be sought from the Finance Committee of the Legislative Council.

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It will be the responsibility of the Authority, when established, to consider how the additional revenue required to offset the phasing out of the Government subsidy should be raised, and one of the Authority's first tasks will be to make formal estimates of revenue and expenditure, from which proposals for possible increases in fee levels can be determined. However, the preliminary calculations that have been made suggest that the following increases might be necessary if the Authority decided to operate all the examinations that it will take over on a self-financing basis:

(a)

(b)

The 'A' level examination of the University of Hong Kong This examination is already run on a self-financing basis, and its takeover by the Authority in 1980 (see paragraph 15) will therefore have only a marginal effect on costs, indistinguishable from the normal minor adjustments made for inflation.

The Matriculation Examination of the Chinese University of Hong Kong - This examination is at present subsidised to the extent of about 20-25% of its full cost. When, therefore, the examination is taken over by the Authority

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